Judge Upholds Ruling Against Musk’s Historic Pay Package
Tesla CEO Elon Musk faced a legal defeat on Monday as a Delaware judge upheld her earlier ruling that nullified his 2018 pay package worth $56 billion. The largest compensation plan in U.S. corporate history had been deemed improperly granted.
Chancellor Kathleen McCormick ruled in January that Musk had exerted undue control over Tesla’s board to secure the lucrative package. She described the approval process as “deeply flawed,” citing the lack of independent negotiation by the board. Despite Tesla’s efforts to appeal the decision, McCormick reiterated her stance, dismissing the company’s arguments and stating that shareholder votes held after the fact could not retroactively validate the arrangement.
Tesla announced plans to challenge the ruling, while Musk condemned it in a post on X, the social media platform he owns, calling the decision “absolute corruption.” This ruling also included a $345 million attorney fee award to lawyers who represented Tesla shareholders in the lawsuit that led to the plan’s invalidation.
Shareholder Votes and Musk’s Legal Response
To overturn the court’s January decision, Tesla held a shareholder vote at its annual meeting in June, urging investors to ratify the disputed pay package. Elon Musk’s legal team argued that this vote demonstrated shareholder approval and should have a ratifying effect. However, McCormick dismissed this reasoning, warning that allowing parties to introduce “new facts” post-judgment could lead to endless litigation.
The legal team representing Tesla shareholders celebrated the ruling, emphasizing its significance in ensuring corporate accountability. “We are pleased with Chancellor McCormick’s ruling, which declined Tesla’s invitation to inject continued uncertainty into court proceedings,” the plaintiffs’ attorneys said in a statement.
Following the January ruling, Musk expressed frustration with Delaware’s legal system, urging businesses not to incorporate in the state. Subsequently, Tesla held a shareholder vote to relocate its state of incorporation to Texas, officially completing the move. Musk’s other ventures, including SpaceX, have also shifted their corporate registrations from Delaware to Texas in recent years.
Musk’s Wealth Grows Despite Legal Challenges
Although the court ruling voided the $56 billion compensation package, Elon Musk’s financial standing remains robust. His net worth has surged by over $43 billion in recent weeks, driven by Tesla’s soaring stock price. Since the November election, Tesla shares have jumped 42%, fueled by investor optimism about Musk’s influence on policy changes under the new administration.
As of Monday, Musk’s Tesla stock was valued at approximately $150 billion, securing his position among the world’s wealthiest individuals. Even without the disputed pay package, Elon Musk’s wealth continues to grow, with his holdings in Tesla and SpaceX contributing significantly to his financial empire. According to estimates, had the 2018 compensation plan remained in effect, its value would have increased to $101.4 billion based on current stock prices.
This legal battle highlights the complexities of corporate governance and executive compensation, underscoring the importance of accountability in one of the world’s most influential companies.
